By Peter Bergman (MoneyAmped.com)
According to individuals familiar with the situation, Xi Jinping recently visited China’s central bank, marking his inaugural known appearance at the institution since assuming the presidency ten years ago. This development highlights the government’s heightened emphasis on bolstering the nation’s economy and the financial sector.
All Eyes Are on the Financial Sector
On Tuesday afternoon, Xi, accompanied by Vice Premier He Lifeng and several government officials, visited the People’s Bank of China and the State Administration of Foreign Exchange in Beijing, as per undisclosed sources who preferred to remain anonymous while discussing confidential details. According to sources, the vice premier also visited the country’s sovereign wealth fund.
Investors closely track Xi’s movements for any potential policy signals, although specific details about the visits remain unclear. According to available public records, the Chinese leader who holds significant power, comparable to Mao Zedong, has not appeared at the PBOC (People’s Bank of China).
If this leader were to visit the PBOC, it would be a notable demonstration of the Communist Party’s recent emphasis on its authoritative control and unity over the financial sector. In the past, inspections of this nature were frequently overseen by the country’s premiers or deputies.
The presence of Xi further strengthens a series of recent actions taken by the authorities to enhance economic growth and ensure market stability. It has the potential to alleviate worries among confident investors regarding the president’s alleged disregard for the economy amidst a series of dismissals of high-ranking ministers and a tumultuous association with the United States.
In the words of one individual, his purpose for visiting the foreign exchange control includes gaining a more profound comprehension of China’s substantial currency reserves, which amount to $3 trillion.
As an upcoming closed-door banking policy meeting approaches, state leaders, regulators, and top bankers prepare to convene and discuss the future of the $61 trillion industry. The primary objective of this gathering is to establish medium-term priorities that will effectively mitigate risks and ensure the financial sector’s stability.
Requests for comment were made to the PBOC and China Investment Corp., the nation’s sovereign wealth fund, but they have yet to respond.
China’s Economy Continues to Come Under Severe Pressure
Various measures have been implemented by the authorities this year to tackle the nation’s declining markets. These measures have been taken in response to the outflow of foreign funds, worsening conditions in property companies, and concerns regarding the financing vehicles of local governments.
Despite witnessing specific indications of economic recovery, the financial markets have been enduring a prolonged period of distress due to a significant decline in investor confidence. Sentiment has been negatively impacted by the implementation of raids on consulting firms from other countries and the introduction of stricter regulations on data security.
Xi’s most recent visit might inspire officials to delve deeper into their arsenal of policies to bolster the world’s second-largest economy and ensure the stability of its financial system. Until now, policymakers have chosen not to employ extensive stimulus measures and excessive market action.
Central Huijin Continues to Acquire Shares of Major Companies
Central Huijin Investment Ltd., a subsidiary of the $1.4 trillion sovereign wealth fund CIC, recently purchased undisclosed exchange-traded funds. The company has expressed its commitment to continuously increase its holdings as part of its efforts to revitalize the declining stock market in the country. In recent times, Huijin purchased stocks in the leading state banks of China.
Investors are keeping a close eye on various policy catalysts shortly. These include the upcoming meeting of China’s ruling Politburo, the Third Plenum of the Communist Party, and the possibility of a conversation between Xi and US President Joe Biden at the upcoming APEC Summit.
